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London Pushes To Dump Dollar,
at Russian Economic Forum

June 6 (EIRNS)—City of London representatives directly, as well as Russian officials under pressure from London-centered financial interests, made their push to get rid of the dollar as the main international reserve currency a centerpiece of the just-concluded St. Petersburg Economic Forum in Russia.

Today, on the last day of the three-day annual event, there was a special panel on "The Future of Reserve Currencies." Vedomosti reports that a key participant was one Ousmene Jacques Mandeng of the UK company Ashmore Investment Management, who demanded that developing sector ("emerging market") currencies quickly be brought into use in a multiple-currency reserve system. As head of Ashmore's Institutional Council on the Public Sector, Mandeng has been campaigning for this policy at least since The Banker—a publication of the London Financial Times—published his article, "Why Central Banks Need More Reserve Currencies," in November 2008.

More recently, Britain's Martin Gilman, the former International Monetary Fund representative in Russia, took to the pages of the Moscow Times to call for Russia and China to start dumping the dollar by selling the Treasury bills they hold as reserves.

At today's session with Mandeng, Kremlin economics adviser Arkadi Dvorkovich said that new reserve currencies imply some center which would manage them. This could be a reformed International Monetary Fund, he said, echoing the scheme promoted by George Soros and others, for the IMF's Special Drawing Rights to become a supranational currency. Dvorkovich said that the SDR should function within a basket of reserve currencies, including the traditional ones, plus China's yuan. Alexei Kudrin, the Russian finance minister who coordinates closely with City of London circles, said earlier during the St. Petersburg Economic Forum, that he foresees the emergence of the yuan as a new world reserve currency within the next decade, if China moves to make it convertible.

President Dmitri Medvedev stoked attendees' interest in the topic of changing reserve currency models, claiming in his keynote speech that over-orientation of the world economy to the dollar was even the chief cause of the current crisis, saying:

Many countries are moving from talk to actual action. This is true of Southeast Asia and Latin America, for example, and our national currency is being increasingly used in settlements with a number of countries.

He claimed that the existence of the euro as a reserve currency had "played a big part in mitigating the global crisis impact in many European countries," and said that multiple reserve currencies, movement toward SDRs as a supranational currency, and the role of gold in the international monetary system should all be on the agenda for discussion.

However, three weeks ago, Yevgeni Primakov, the former prime minister and a member of the Academy of Sciences in economics, threw cold water on fantasies about the ruble's becoming a reserve currency, given Russia's economic condition, or any kind of mass departure from the dollar. "A rational approach to world financial reform is not compatible with the notion that it would be possible to downgrade the U.S. dollar," Primakov said on May 18. On June 1 in an interview with Regnum.ru, economist Yelena Veduta of Moscow State University joined the growing chorus in Russia, saying that the "ruble as reserve currency" scheme, of which Medvedev is enamored, is not going anywhere soon.